China Offers 100% Ownership to Foreign Investors of E-Commerce Companies
China is doing everything in its power to excite foreign investors to come invest their resources in their country. The government of China has now allowed foreign investors to hold 100% stake in e-commerce companies in Shanghai’s Free Trade Zone.
This new policy comes from China’s Ministry of Industry and Information Technology. Previously the investors needed to partner with a Chinese company to conduct business. They were also only allowed to own 55 percent stake in the company. China aims to gather more access to retailers and consumers outside the country.
The Shanghai Free Trade Zone (SFTZ) was established in 2013. It is the first free trade zone in mainland China and spans across 29 square kilometers. The intention is for the SFTZ to expand gradually to cover the entire 1,210 square kilometres.
At present, there are more than 12,000 companies operating in the SFTZ. This number also includes 1,677 foreign-funded firms. This decision today will help the foreign companies such as Amazon to infiltrate into the Chinese e-commerce space.
The Chinese e-commerce market is profitable and growing at a rapid rate. At present, there are about 330 million online shoppers in the country, which, for perspective, is more than the entire population of the United States. Chinese e-commerce company, Alibaba.com had also shown its might on the NYSE when if offered the biggest IPO in history worth US$ 25 Billion. Alibaba is planning to enter India and was in talks with Snapdeal in September 2014.